Financial Planning Tips

It’s a question we all face almost every day: debit or credit? 
 
You can run a debit card as a credit card transaction, but can not run a credit card as a debit card transaction. However, most credit cards can be used to obtain a cash advance from an ATM. Talk to your credit card company about this service, but the interest rates are usually higher for a cash advance.
 
Using a debit card as a credit card does not magically create a line of credit, it changes how you verify the transaction. Running the card as a debit requires you to enter a Personal Identification Number (PIN) and running the card as a credit requires you to sign for the transaction.
 
One main difference is how they are processed. A debit transaction is instantaneous while a credit transaction may take a couple of days because merchants usually run these in batches. Another difference is fees for merchants: typically a credit card transaction cost the merchant a little more.
 
While it is more advantageous to run a debit card as a debit card for a merchant it is more advantageous to run a debit card as a credit card for the consumer. When a debit card is run as a credit transaction you have the same protection as credit card customers, which is typically better than debit protection in terms of not being liable for unauthorized purchases as Federal law affords credit card consumers better protection than debit card users. Getting money back in the event of fraud is much easier for credit customers than for debit users.

It seems that in times of an economic downturn scam artists come out of the woodwork trying to profit from schemes that look to help out those that are troubled. This economic downturn currently being experienced is no different. Here are some scams to watch out for:
 
Playing off government programs: Congress has recently passes many grants and relief acts to help out Americans and scam artists are trying to profit from it. If someone (or a company) is trying to get you to pay an up front fee to apply for the grant or relief act then it is probably a scam. Government programs designed to aid those in need do not require an application or up front fee.
 
Credit repair: There is no instant way to repair your credit. It takes paying your bills on time and other practices outlined in our blog (LINK TO PREVIOUS BLOG). If someone is promising to fix your credit quickly, it is probably a scam.
 
Cashing in your gold: You may have seen the TV commercial about sending in your unwanted gold items, such as jewelry, to a company to have cash sent back to you. Be very careful with the fine print. These companies often use time against you by taking a long time to process the gold and return check to you. Once you receive the check, which is typically for much less than the gold is really worth, the return period for your gold has lapsed.
 
Paying up front: Any program that promises to make you money quickly, but requires you to send money to them in an irrevocable form (such as money order or wire transfer) is probably illegitimate.
 
Paying attention to the old adage: “If its too good to be true, it probably is” will take you a long way in protecting yourself from a scam.

There are several basic rules to follow to stay financially sound and save money in the long run:
 
Budgeting
By keeping a budget you know exactly where every dollar you spend goes. Even better, you can evaluate how much you are spending where and discover areas where you can cut back.
 
An easy way to budget it to use a credit card for all of your purchases in a month. (A credit card with no annual fee and one that you pay off the balance in full at the end of each month). Using the credit card has some good advantages: it’s secure, most cards offer a summary of where you spent your money, and the money you would be spending on purchases can earn interest in a money market account before the bills come due.
 
Invest Now
The longer the time period you invest before you retire, the better. Compound interest is a great tool that can work in your favor and the earlier you start, the greater the benefit.
 
Start investing now by contacting a Financial Advisor.
 
Pay Bills on Time
By paying bills on time you can not only avoid late fees, but keep your credit score high making the cost to borrow cheaper.
 
These short tips should provide a start to a financially successful life.

- Think twice about I.D. theft insurance: Some companies also offer identity theft insurance that will cover expenses if you have to straighten out your credit, but realize they will not do the dirty job of restoring your credit — that’s up to you.
 
- Watch that wireless: If you have wireless Internet on your laptop make sure that a password is required to access the Internet. This will help keep your information safe.
 
- Stick with a known ATM: Some of those independent ATMs you see in convenience stores, restaurants and bars may be collecting your data for illegal use. Use ATMs at established banks.
 
- Buy a shredder: Or at least be willing to cut up all envelopes, direct-mail credit applications and receipts that you would typically throw away.

- Beware of phishing, which is a process by which scam artists try and get you to divulge your Social Security Number, your account numbers, address or other personal information under the guise of a legitimate company you may already be doing business with. It’s most common over email and the Internet. Be careful when entering your account information and if you are at all skeptical about a situation, it is best to contact the company.
 
- Keep an eye on your transactions to ensure there are all legitimate. Online account checking makes this easy!
 
- Watch your incoming and outgoing mail. Thieves could grab bills before they leave your mailbox gaining valuable account information. Leaving mail, especially checks mailed to you in a mailbox is not smart.
 
- Make your username and passwords for online account hard to guess. These days your dog, maiden name, or house address is not going to cut it.
 
- Keep an eye on your credit report. See our previous blog on how to check your credit report.

Online Banks, those without brick and mortar facilities, are often able to offer consumers great interest rates on checking and savings accounts and low fees (sometimes free!). As big banks are ramping up their fees and charges many people are turning to online banks to save money and to earn a better interest rate.
 
Online Banks typically let you use any ATM that you can find and will usually reimburse you for the ATM charge. Additionally, these banks make fund transfers to a multitude of different accounts hassle free. Online bill pay is included with online banks.
 
For more information see: Online Bank Deals

Americans are able to check their credit report three times in a one year period, FOR FREE!! The three credit reporting agencies are Equifax, TransUnion, and Experian and each provide you with a free credit report once in a twelve month period.

 
To obtain the report you need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

 
It is important to maintain a watch on your credit report to ensure you identity has not been stolen and there are no inaccuracies on the report, especially when you are applying for new credit.

To obtain your credit report go to: www.annualcreditreport.com

Whether you are divorced, widowed, or just happily single, it seems that there is very little personal finance advice out there for you.  However, those who are single need just as much guidance as the average couple.

An emergency savings plan is particularly important if you are single.  It can be a bit daunting to know that there is not the safety net of a spouse’s income.  Having a financial plan for the unexpected emergency can mitigate that fear.

As I have mentioned in the past, taking advantage of group, association or personal disability insurance is the first step toward income replacement.  If your employer does not offer disability insurance, often professional associations do.  Or, you can seek out personal disability insurance through a trusted insurance advisor.

It is also important to have an emergency savings account. An emergency savings account should be liquid, which means that you could write a check for your mortgage payment right away.  A single person should have a minimum of six months expenses saved in this type of account.

My single clients always ask me if they need to have a will.  My answer is yes.  You should make the decision about how your estate is distributed even if you feel it isn’t big enough to refer to as an estate.  You need to have powers of attorney documents anyway, so you might as well have a will drafted while you are visiting your attorney.

A durable power of attorney, health care power of attorney and a living will are especially important legal documents for singles to have.  Singles do not have a spouse, which is the obvious choice for couples, to make business, health care and life sustaining decisions in the event of an emergency.  For this reason, it is particularly important for singles to have their choices clearly defined in a legal document.

This advice is applicable to everyone, but the emphasis on emergency planning is particularly important for singles.  As always, seek the advice of experienced professionals who come highly recommended.

If you are considering purchasing a new car soon low prices may not be the only thing to influence your decision. Passenger vehicle purchase made after February 16, 2009 and before January 1, 2010 are most likely able to deduct the state and local sales and excise tax paid on the purchase.
 
The deduction will be available on the 2009 tax return, filed in 2010. This credit is available to any filer and not just someone who participates in itemized deductions. However, at the modified adjusted gross income level of $125,000 for individuals and $250,000 for joint filers the credit begins to phase out.
 
Source: IRS Press Release

Are you tired of getting countless unsolicited credit card offers in the mail? Did you know you can opt out of those offers through the three credit bureaus? By going to www.optoutprescreen.com or calling 1-888-567-8688 you can opt out of offers for credit and insurance permanently!

When completing the form, you can decide whether to electronically opt out for 5 years or permanently opting out forever by printing out a form and mailing it in. The form requires your name, address, social security number, and date of birth.

Source: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt063.shtm